China's Steel Threat May Be
Excess, Not Shortage
Global Supply Expected
To Surge as Country
Becomes Net Exporter
By PATRICK BARTA in Bangkok, Thailand, and PAUL GLADER in Pittsburgh
Staff Reporters of THE WALL STREET JOURNAL
December 30, 2004; Page A1
For much of the past two years, China has threatened to foster a world steel shortage with its prodigious appetite for imports of the metal. Now the country has become a net exporter, its domestic demand is slowing and steelmaking capacity is up around the world, sparking concern over global oversupply and tougher times for the industry in the years ahead.
Behind China's shift is a sharp slowdown in the growth of steel consumption at home combined with continued increases in production. As Beijing has worked to cool an overheated economy, the growth in domestic demand for steel recently has been rising only about 5% a month compared with year-earlier periods, after average monthly increases of 26% in 2002, 2003 and early 2004, according to UBS AG.
Meanwhile, UBS estimates that Chinese steel production will climb 22% this year to 268 million tons, and grow a further 14% next year to 305 million tons. In November, China reported net exports of more than one million metric tons of steel, more than double October's level and a reversal from November 2003, when it was a net importer of nearly three million tons.
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